Developing a Product strategy
All that u needed
• Product- riskiest of the marketing mix
• Effect of increased pace of technology
– Become obsolete before you recover money
• We cover
• Need to understand Product
• Product strategies over PLC
• Managing the industrial product line
Core & Augmented Product
Augmented
properties
Core
Product
Compt
Enhanced
properties
• Product strategies involve continual change:
• Any change in the consumer need
• Change in technology
• Change in law
• Change in economics
• Changes in culture
• Changes in PLC – any modification at
maturity
• Product strategy also involves
• Whether changes are required in existing
product?
• Whether products should be added / dropped?
• INDUSTRIAL PRODUCT MANAGEMENT
• Industrial product manager is very vital in this:
– Forecasts
– Does market sensing
– Does customer linking
• Product and marketing managers
• When?
• Series of product & one market
• One product line several markets
• What is hybrid
Sales & Profit Life Cycles
Sales & profits ($)
Introduction Growth Maturity Decline
visionaries Pragmatist Conservatives laggards
Time
The Product Life Cycle
Offering Development
Stage-TECHNOPHILES
•No sales volume – offering still being
developed.
•Product is not yet completely defined.
•Profits do not exist.
•Development at whose insistence?
•Promotion may be oriented towards
publicity about technological developments.
•Heavy investment to prepare the offering
to satisfy customer needs.
Offering Introduction
Stage-visionaries
•Low Product sales volume.
•is somewhat basic – little need for competitive
differentiation.
•Profits are typically negative.
•Supplier experiments growing pain and customer pains
of uncertainty
•Low learning- OK (electronic calculator)
•New offering a logical extension of existing- it must
be OK with the customer (Int Mktg)
•High learning- takes time (Elec typewriter)
Offering Growth
Stage- pragmatist
•Good news- Product is accepted
•Bad news- likely to attract competition
•Improve design
•Market penetration pricing may be appropriate as competitors
bring pressure on high margins.
•Profits increase - new adopters accept product.
•Accordingly, product differentiation becomes important to
distinguish the offering from competitors (and to help protect
margins.)
•Promotion serves to remind/reinforce decisions.
•Distribution is often important in the training and education of
customers.
Offering Maturity Stage-
Conservatives
•Profits have peaked, competition fights over market
share.
•Promotion reinforces buyer decisions and focuses on
supplier reputation and value.
•Distribution strives to serve all market sub-segments.
•Time to think of new product offerings
•Price is a major component of the marketing mix.
•New customers do not replace sales volumes as old
customers move to newer products- value migrations
Offering Decline Stage
laggards
•Consolidation usually occurs among suppliers
•Product line is reduced to minimize product
variation – efforts are made by remaining
competitors to operate at productive rates.
•Promotion reduced to minimal levels to
accommodate existing customers.
•Price, particularly associate with a long-term
contracts, is a major part of the marketing
mix.
How Can You Determine Where
an Offering Is in the PLC?
• Develop and review trend information for the past
cycles.
• Profit / sales ratio
• Examine changes in the number and nature of
competitors.-
• South Korea into LA why not I as well
• Review short-term competitive tactics – are
competitors pricing to utilize new capacity or improve
short term sales volume?
• Are new product introductions aimed at segments
currently served by existing offerings?
• Will a competitor innovate your product out of
business? It is better to obsolete yourself instead of
getting it done by competitors
• Do unto yourself what you would have done to others
Perceptual Map
1.0
0.8
0.6
0.4
0.2
-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6
-0.2
-0.4
-0.6
-0.8
Introduction Growth Maturity Decline
Sales Low Rapid Growth rate redn Declining
Peak sales
Profit Loss Reaches peak Increased competition Pushes cost up
Investment in reduces profits and
prodn & mktg cuts into total profits
Competito Nil Growing Many fight for same Few . Shakeout of
rs pie weak
Customers Innovative Early adopter Mass Mkt 68 % Laggards 16%
2.5% 13.5% Conservatives
Visionaries Pragmatists
Overall strategy Product Price Distribution Promotion
I Mkt acceptance. Basic Design Skim Selective Informative.
Foster product low learning Pen Perhaps
awareness and trial products publicity
Cost+
Cmp
G Mkt Penetration. Product /design High Intensive Persuasive.
Persuade mass Mkt Improvement. Loyalties
to prefer your brand Expand line
M Defend brand. Stop Differentiate. Market Intensive More user/
competitors from Full line prices. Avoid usage.
entry Find new users war Loyalties
keep current
satisfied
D Redn of expenses. Minimal Low enough selective Minimal to
Prepare for removal changes to to permit none. Perhaps
of prod. Squeeze all product. Line liquidation negative
benefits of the reduces to best of inventory
product servers
Strategies for existing products
• Do nothing
• If you have a huge customer base, but is in
the process of being replaced, lower OH
and cost of production
• Change the product?
• If things wont work, drop the product. Why
not?
Product elimination decisions
• Customers have no alternatives despite
changes in environment- CRDI- do not
eliminate
• Will relationship gets jeopardized
• Will it hurt the profitability of other
products
• Corporate image-raise doubts on the
reliability of the firm